Ada Recinos, Deputy Press Secretary, ada.recinos@sierraclub.org
New York — Today, New York City Comptroller Brad Lander announced a plan to develop a new policy to exclude prospective private markets investments in downstream and midstream fossil fuel infrastructure for the portfolios of three of the City’s public pension systems. The pension funds already started to exclude upstream fossil fuel development from their private markets investments starting last year. Taking this next step to also cover downstream and midstream fossil fuels would make the NYC funds the first pension systems in the country known to do so.
In response, the Sierra Club’s acting deputy executive director and NYC resident, Loren Blackford, said:
“The Sierra Club and New Yorkers are grateful to see Comptroller Lander and New York City pension trustees continuing to prioritize worker’s long-term savings by taking action to mitigate the climate crisis and its economic impacts. This new policy would help address the growing role of private market investments in financing dirty fossil fuel projects and enabling major polluters that operate with little transparency. It is also another important milestone for the leadership of NYC’s pension systems, which have been setting an ambitious and necessary example for other pensions across the country to follow to confront the systemic threat of climate change. With the impacts of climate change becoming ever-clearer, it's never been more urgent to stop financing the industries that drive the crisis, which threatens our economy and so many people’s retirement security.”
By 2022, the same three City pension funds — the NYC Employees’ Retirement System (ERS), NYC Teachers’ Retirement System (TRS), and NYC Board of Education Retirement System (BERS) — finished divesting their public equities holdings of fossil fuel reserve owners. In 2023, the NYC Comptroller and trustees of ERS and TRS released multi-faceted implementation plans to reach their goal of net-zero emissions in their investment portfolios by 2040, including asking all private markets managers to exclude upstream fossil fuel investments. The Sierra Club applauded those moves that set a nation-leading example for protecting pension beneficiaries by combating the climate crisis.
In the fossil fuels sector, “upstream” refers to the exploration and extraction of raw materials (such as drilling and mining), “midstream” involves the transportation and storage of those materials (such as pipelines and export terminals), and “downstream” covers refining and distributing the final products to consumers (such as refineries and petrochemical plants).
Private market investments are investments in the equity or debt of companies that are not publicly listed and traded. Recent data shows that private market investments in fossil fuels are on the rise as some dirty energy companies have seen a reduction in their access to capital via public markets. This comes as public pension funds have increased their allocations to private investments in recent years, and more investors call for greater transparency and accountability around climate impacts in private markets.
The 2024 Private Equity Climate Risks Scorecard, released earlier this month, studied 21 private equity firms that manage $6 trillion worth of companies, and found that two-thirds of the energy companies in their portfolios are invested in fossil fuels, using hundreds of millions of dollars from pension funds. For example, pension funds in the US, including NYC, have been supporting the expansion of dangerous LNG export terminals via private equity. These types of investments in midstream and downstream fossil fuel infrastructure would presumably be addressed in the NYC pensions’ forthcoming policy.
The City’s five public pension funds — which also include the NYC Police and Fire Funds — have over $274 billion in total assets under management, as of the close of the 2024 fiscal year, 26% of which are reportedly held in private markets alternatives.
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.